That will come as a surprise to the many thousands of Canadian eBay sellers who have been using the service since around 2005.
Did you go to paypaldotCOM or paypaldotCA?
Also, be aware that if you are listing in US dollars but do not have a bank account at a US bank (like CitiBank or Bank of Lower Podunk) when you transfer your US money back to your Canadian bank you will be charged a fee for the currency exchange.
If your Canadian bank is in US dollars, you will be charged that fee for changing the USD into Canadian and then from Canadian back to USD.
This actually has nothing to do with Paypal. It is a US Treasury rule in place for money laundering.